Nov. 9, 2022

Putting collaboration at the heart of delivering Australian Infrastructure projects

By Rekha Thawrani, Global Head of NEC

Challenges for Australian infrastructure procurement

A key priority outlined in the 10-point commitment to Construction for the NSW Government is to procure and manage projects in a more collaborative way. This need to shift from combative contracting to longer-term collaborative models with an integrated supply chain is also recognised in Delivering Outcomes, published by Infrastructure Australia in March 2022.

Currently most Australian infrastructure projects are procured on a project-by-project basis. This means that resources across the sector are invested in bidding for one-off contracts. By removing the need for excessive bidding, through longer-term procurement frameworks, clients and the wider industry can improve productivity and reduce costs. Infrastructure Australia’s Delivering Outcomes emphasises that long-term, collaborative relationships should be “embraced across the infrastructure industry and drive better outcomes for all parties”.

Another challenge for the Australian construction market is the plethora and variety of contracts currently in use. When standard construction forms are used, they are commonly heavily amended. Still more projects are delivered through entirely bespoke contracts. Deploying suitable standard forms of contract can achieve improvements in project outcomes. The productivity and efficiency advances following a move away from bespoke contracts and clauses are marked.

Traditionally in Australian construction there has been an unbalanced risk allocation. This has resulted in contractors taking on project risks they cannot control. The commercial model has created the foundation for construction disputes to occur. Although anecdotally this risk allocation is improving, there is still more to be done to move away from bespoke, complex contracts and the adversarial culture they create.

Embedding collaborative contracting

Collaborative contracting offers the opportunity for Australian infrastructure procurement to build confidence, increase trust and improve long term relationships throughout the supply chain. The NEC4 Suite of Contracts has collaboration as the foundational clause, and it also contains processes designed to support users in working collaboratively.

Further, the contracts enable users to standardise procurement methods, being suitable for every relationship within the supply chain. The use of collaborative contracting can make the risk allocation fairer for constructors and enable the successful management of risk. This increases the attractiveness of these projects for constructors and the wider supply chain.

There has been significant interest in collaborative contracting in Australia following some high-profile trials, including Sydney Water’s adoption of NEC4 contracts for its new procurement strategy, P4S. NEC is unique as no other contract suite aspires to improve the procurement and delivery process, rather than just facilitate it.

Required cultural changes

There is also a cultural shift that needs to take place within the infrastructure sector. A commitment to collaborative behaviours throughout the supply chain is crucial to embed the use of NEC, or any collaborative contracting model. According to Delivering Outcomes the commercial model needs to support the adoption of the one-team approach.

Collaboration can help to support wider advances across the industry, with improved productivity, fewer disputes and overall better project outcomes. However, it is imperative that governments and infrastructure owners lead this transformation.

Supporting adoption of NEC

To support companies and organisations understand how NEC can support projects and deliver better outcomes, we have created the NEC Toolkit. Download the NEC Toolkit here.

Individuals, corporate, and affiliate organisations in Australia are encouraged to join the NEC Users’ Group designed to support NEC users worldwide. By becoming a member, you can access a host of benefits, including exclusive technical support. Additionally, the NEC Community App provides an online space which brings NEC users, communities and content together in a private interactive platform

For those in Australia who want to find out more about the benefits of collaborative contracting, understand how the NEC contract works and the support that is available to start your NEC journey, please email your enquiries to Jacki Heppard, Client Development (Australia).

NEC will also be presenting at Sydney Water’s Supply Chain and Recruitment Expo during the trade visit. Find more information on NEC's involvement at this event here.

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